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Is JB Hi-Fi Limited's (ASX:JBH) CEO Overpaid Relative To Its Peers?

Simply Wall St

Richard Murray became the CEO of JB Hi-Fi Limited (ASX:JBH) in 2014. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for JB Hi-Fi

How Does Richard Murray's Compensation Compare With Similar Sized Companies?

According to our data, JB Hi-Fi Limited has a market capitalization of AU$3.8b, and pays its CEO total annual compensation worth AU$3.4m. (This number is for the twelve months until June 2018). We think total compensation is more important but we note that the CEO salary is lower, at AU$1.2m. We examined companies with market caps from AU$3.0b to AU$9.5b, and discovered that the median CEO total compensation of that group was AU$3.4m.

That means Richard Murray receives fairly typical remuneration for the CEO of a company that size. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.

You can see, below, how CEO compensation at JB Hi-Fi has changed over time.

ASX:JBH CEO Compensation, August 31st 2019

Is JB Hi-Fi Limited Growing?

Over the last three years JB Hi-Fi Limited has grown its earnings per share (EPS) by an average of 14% per year (using a line of best fit). It achieved revenue growth of 3.5% over the last year.

This demonstrates that the company has been improving recently. A good result. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Shareholders might be interested in this free visualization of analyst forecasts.

Has JB Hi-Fi Limited Been A Good Investment?

Boasting a total shareholder return of 34% over three years, JB Hi-Fi Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Richard Murray is paid around what is normal the leaders of comparable size companies.

The company is growing earnings per share and total shareholder returns have been pleasing. So one could argue the CEO compensation is quite modest, if you consider company performance! CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling JB Hi-Fi (free visualization of insider trades).

Important note: JB Hi-Fi may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.